Patricia Connor is quite clear that her exposure to the British care system has destroyed not only her life but also that of three of her four younger siblings.

"They took me off my mum to give me a better life. They gave me a worse life," she concludes at the end of a two-hour summary of the major events of the last 23 years, narrated from a plastic armchair in her hospital room where she has spent a week being treated for an HIV-related infection.

Articulate and cheerful, Patricia runs through her history in an obliging and jaunty tone. She says she plans to write a book about her experiences, and there is enough material here to outshine the best-selling misery tomes.

She starts with the moment she was taken away, aged nine, from her mother by social workers on suspicion of neglect, which she says was unjustified. She spent a relatively happy time in foster care with her three younger sisters and a brother. But then came the sudden, inexplicable decision of her foster carers to send her away after three years. "They told me I was going on holiday for two weeks. They tricked me."

She tempered her unhappiness at a new foster home by drinking a lot of White Lightning cider, ran away and spent time in a children's home. The situation was exacerbated by sexual abuse from a carer, her rape by an older man who liked to prey on vulnerable children's home girls, and dropping out of school without GCSEs.

She became pregnant at 16, was abandoned by her baby's father and entered a new relationship where her partner knowingly infected her with HIV. "When the doctor told me, I was like 'HIV positive? So what's HIV negative then?' I didn't have a clue. I'd left school before we learnt about it."

Her subsequent depression led to her becoming a crack addict, which in turn led to her one-year-old daughter being taken into care. She finishes with her ongoing campaign - now she's off drugs and studying again, she intends to win her child back.

Her siblings have fared equally badly, but what is particularly depressing, about their family history, beyond the sensational detail of each disaster toppling, domino-like, into the next, is the closeness with which their stories echo the statistical failures of the care system across the country.

More than half of all children in care (53%) leave school, like Patricia, with no formal qualifications, and only 13% get 5 A*- C grade GCSEs, compared with 47% of all children. Just 6% enter higher education. Twenty percent of women who leave care between the ages of 16 and 19 become mothers within a year, compared with just 5% of the total population. Parents who have been through the care system are twice as likely to lose the right to care for their own children.

The state's inability to provide adequate care for some of the country's neediest children is one of Britain's most acute social injustices. Despite the government's frequently repeated commitment to tackle social exclusion, the system still perpetuates an underclass of young adults with blighted life chances.

Prospects for care leavers here are worse than in countries such as Germany, Denmark and Norway, where care is not seen as a last-resort but as a positive alternative for struggling families.

Here, despite a barrage of well-intentioned, reforming legislation, there is a recognition among politicians and professionals that many things remain very wrong with the system: poorly trained workers in frontline positions, high staff turnover and a chronic shortage of foster parents, so that children are not carefully matched with suitable carers but placed wherever is available.

Social workers are so familiar with the dismal outcomes from care that they see taking children into the system as something to be avoided at all costs. It is this conviction, combined with a sense that struggling families can be mended, that is understood at some unspoken level to have motivated child protection workers in Haringey to defer removing Baby P from his family, with disastrous consequences.

No one can feel positive about taking a child into care when the official outcomes at the other end are so bleak.

"My family got destroyed by the care system," Patricia says. "They've all become institutionalised."

Her brother has followed the well-trodden route from care to prison, and at 21 has notched up more than 66 convictions. "He doesn't care what punishment they give him. He has had more stability in prison than he ever had when he was in care," she says. Twenty-three percent of the adult prison population has spent time in care, although care leavers account for less than 1% of the total population; 30% of children in custody have been in care.

Patricia's next sister down was befriended at the age of 12 by a prostitute, who was scouting for defenceless girls near the gates of her London care home. "This woman said she would look after her. All my sister wanted was a mum. She got her addicted to heroin and crack when she was 12 and got her working on the streets near Paddington as a prostitute. She got pregnant that year," Patricia says. "She's in a mental institution now."

Charity Barnardo's is campaigning to make people aware of this widespread, predatory targeting of children.

Forty-five percent of children in care are assessed as having a mental health disorder, compared with 10% of the general population. Forty-two percent of prostitutes interviewed for a recent research paper had been in care.

A third sister is still in care. "She's a serial absconder and an arsonist," Patricia says.

There are 59,500 in care in England (0.5% of the total population of children). About 6,000 are looked after in children's homes, while the rest are with foster carers. The government freely admits standards remain unacceptable, and there has been no shortage of initiatives and legislation during Labour's administration aimed at improving the record. The amount spent has been increased from £1.3bn in 2000-01 to more than £2.1bn in 2006-07.

"We need to do an enormous amount more. We really need to see some very significant improvements before we even start to feel comfortable with how things are going," said Lady Morgan, the minister responsible for children in care.

Outside observers are more outspoken. "There is absolutely no doubt that the care system is failing if you look at the outcomes," said Natasha Finlayson, chief executive of the Who Cares? Trust, one of several charities set up to champion the needs of children in care.

Tim Laughton, the Conservative spokesman on care, agreed: "The problem is that the outcomes on every measure are appalling and the gap of achievement is widening."

Describing the outcomes as "startling" and "worrying", the children's commissioner for England, Al Aynsley Green, said that during his extensive conversations with children in care, the majority focused on their negative experiences.

But, in the wake of the Baby P scandal, a new debate is crystallising, with senior figures in the sector asking whether, counter-intuitively, the answer might actually be to take more children at an earlier age into a reformed, improved care system, rather than leaving them with inadequate parents.

The heads of two leading children's charities have gone on record in recent weeks, arguing that care should be seen in a more positive light.

Martin Narey, head of Barnardo's, said: "We are trying too hard to fix dysfunctional families. We should be concentrating on making care the decent and stable place it should be."

Andrew Flanagan, the newly appointed chief executive of the NSPCC, echoed his concerns, challenging the "presupposition that leaving a child in the home must be better".

Every aspect of this debate is inflammatory, but those who argue in favour of the care system stress that the outcome figures need to be treated with caution and understood in the context of the level of damage to the children before they are taken into care.

Mike Stein, an academic with the University of York, said the excessive focus on poor outcomes had helped to create a climate where social workers saw care as the worst possible option, and had contributed to vulnerable children being left too long with failing parents.

According to Stein, the startlingly bad outcomes can be partially explained by the fact that many of the children come from very deprived backgrounds, and may have been severely neglected before being removed into care. The fact that a child does badly is not always the fault of the care system, he concluded.

Lady Morgan agreed that expectations of outcomes needed to be tempered. "Looked after children in this country are some of the most troubled children in our society," she said. "They have some really significant hurdles to overcome in their lives. It is right that we should have very high aspirations for them, but they start from a very difficult starting point compared to other children."

Britain had a disastrous history of abuse and paedophilia scandals in its care homes from the 1960s until the early 1990s. As a result, there are no longer any large residential homes - and most homes are organised in units of no more than six children.

The abuse has cast a long shadow on the sector, discouraging many from taking up work in care homes, where staff turnover is high - an extra disruption to the children's lives. The failures of these homes have added weight to the sense that if the natural families can't be fixed, then the next best option is foster care - which is both closer to the family model, and considerably cheaper (on average, foster care costs £489 a week, while a place in a care home costs £2,428).

However, fostering also has its problems. There is a shortage (estimated at about 10,000) of good quality people willing to take on this responsibility, which means social workers struggle to place children in the most suitable families and are often forced to put them wherever is available.

Although many fosterers are motivated by altruism, some see it as a way of generating income, and there are concerns about the amateur nature of the service.

"There are not many ways of making money if you don't have any qualifications and fostering is one thing you can do," said one charity head, who asked not to be named.

Reform is under way, a process Lady Morgan described as a "hard slog". Most in this sector are positive about the Care Matters legislation passed by the government, and upbeat about a number of changes already in place - the decision to support children in care beyond their 16th birthdays and an initiative to help them get into the best schools.

But care leavers (to whom the government has promised to listen more attentively) highlight a more fundamental flaw: a chronic instability in the system that allows children to be bounced around between foster carers and residential homes. Instead of matching children with appropriate carers first time around, the shortage of options combined with over-stretched social workers, makes the process very hit and miss.

Patricia pinpoints the start of her decline to the moment when she was moved from her first foster carers.

No one knows more about this problem than Kelly Martin (not her real name), a 14-year-old who had more than 40 foster placements before the age of 12. Her case is becoming a quiet cause celebre among campaigners for change, but her position is not unique. Newly released figures show that more than 1,200 looked-after children have had 10 or more foster placements since they went into care, while 10 children had been through more than 50 placements.

It was not possible to talk to Kelly about her experiences - Barnardo's officials, who have organised an apparently stable new placement, said she had been through enough without having to discuss it with someone new. But her social worker and new foster carer set out what they think went wrong, requesting anonymity to avoid identifying the child.

Kelly was three when she was taken into care, shortly after her alcoholic mother was judged incapable of looking after her. Some of her foster carers were unable to cope with her behaviour, which grew worse the more she was shuffled around. Others had their own problems - marriage breakdowns, ill-health - which meant that looking after Kelly was no longer a priority. Many of the moves were short-term respite placements, allowing her foster carers to take a break.

"It was crisis intervention all the time," said her social worker. "A lot of this is not well-planned. We are ringing people up and saying 'Who is available tonight?' Unfortunately it's almost the luck of the draw when the child comes in. We're not always able to sit down and work out who's right for which family. When you need to move a child, you need to act fast. There's no cherry picking," she says.

Initially she was placed with inexperienced foster carers who could not cope. "A lot of foster carers don't realise that these are damaged children. The reality doesn't hit them until the children are with them," the social worker said.

The placements flung her from one side of the country to another, from a rural backwater to a busy city, putting her through four primary and, to date, two secondary schools. Medical attention was constantly interrupted by the moves. "Each time she moved more damage was created," said the new foster carer, whose patience and kindness is gradually winning the girl over. "She didn't have the language to express the anger she felt."

Today's select committee report recommends that social workers try harder to prevent the breakdown of foster care relationships. "The prospect of a broken placement should be treated with as much concern as the prospect of a child being removed from their birth family," it says.

Jonathan Stanley, manager of the National Centre for Excellence in Residential Child Care at the National Children's Bureau, says standards are gradually improving here, but he stresses that the staff need better training. In Denmark, most workers in care homes have degrees. In the UK they only need an NVQ3 - a different league of qualification. "We've not valued our residential workers, yet they are working with the most needy in the country," he said.

For really improved outcomes, residential care and foster care need to be transformed. "Residential care needs to be top notch and that's expensive," said Wes Cuell, director of children's services at the NSPCC.

Patricia responds cautiously to the idea that it is simply a question of better training for staff and more resources. She says things went wrong for her because she never had a parent substitute - she feels no one ever cared about her enough to tell her not to go out drinking, not to hang out with boys, to get back to her school books.

"You've got one carer and then the next carer comes along. You never know who loves you and who is sincere. All I wanted was security and love," she says.

She pauses as a nurse comes in with a plastic bag full of drugs to take home to keep her healthy over the next few weeks. "I'm not bitter. I'm optimistic," she adds. "My experiences in care have made me strong."